XML 23 R13.htm IDEA: XBRL DOCUMENT
v3.23.2

Fair Value | 6 Months Ended
--- | ---
Jun. 30, 2023
Fair Value |
Fair Value | NOTE 5. Fair Value Fair Value Measurement The Company follows FASB ASC Topic 820, “Fair Value Measurement and Disclosures,” which requires additional disclosures about the Company’s assets and liabilities that are measured at fair value. Fair value is the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. In determining fair value, the Company uses various methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company utilizes techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value will be classified and disclosed as follows: Level 1 Inputs
| ● | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
| ● | Generally, this includes debt and equity securities and derivative contracts that are traded in an active exchange market (i.e. New York Stock Exchange), as well as certain U.S. Treasury, U.S. Government and sponsored entity agency mortgage-backed securities that are highly liquid and are actively traded in over-the-counter markets.
​ Level 2 Inputs
| ● | Quoted prices for similar assets or liabilities in active markets.
| ● | Quoted prices for identical or similar assets or liabilities in inactive markets.
| ● | Inputs other than quoted prices that are observable, either directly or indirectly, for the term of the asset or liability (i.e. interest rates, yield curves, credit risks, prepayment speeds or volatilities) or “market corroborated inputs.”
| ● | Generally, this includes U.S. Government and sponsored entity mortgage-backed securities, corporate debt securities and derivative contracts.
​ Level 3 Inputs
| ● | Prices or valuation techniques that require inputs that are both unobservable (i.e. supported by little or no market activity) and that are significant to the fair value of the assets or liabilities.
| ● | These assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.
​ Fair Value on a Recurring Basis The following is a description of the valuation methodologies used for instruments measured at fair value on a recurring basis: Debt Securities Available for Sale The fair value of available for sale ("AFS") debt securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). As of June 30, 2023, the fair value of the Company’s AFS debt securities portfolio was $93.0 million. Most of the Company’s AFS debt securities were classified as Level 2 assets at June 30, 2023. The valuation of AFS debt securities using Level 2 inputs was primarily determined using the market approach, which uses quoted prices for similar assets or liabilities in active markets and all other relevant information. It includes model pricing, defined as valuing securities based upon their relationship with other benchmark securities. Included in the Company’s AFS debt securities are two corporate bonds which are classified as Level 3 assets at June 30, 2023. The valuation of these corporate bonds is determined using broker quotes or third-party vendor prices that are not adjusted by management. Market inputs used in the other valuation techniques or underlying third-party vendor prices or broker quotes include benchmark and government bond yield curves, credit spreads and trade execution data. Equity Securities with Readily Determinable Fair Values The fair value of equity securities is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). As of June 30, 2023, the fair value of the Company’s equity securities portfolio was $8.2 million. All of the Company’s equity securities were classified as Level 1 assets at June 30, 2023. Interest Rate Swap Agreements The fair value of interest rate swap agreements is the market value based on quoted market prices, when available, or market prices provided by recognized broker dealers (Level 1). If listed prices or quotes are not available, fair value is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). The Company’s derivative instruments are classified as Level 2 assets, as the readily observable market inputs to these models are validated to external sources, such as industry pricing services, or are corroborated through recent trades, dealer quotes, yield curves, implied volatility or other market-related data. There were no changes in the inputs or methodologies used to determine fair value during the period ended June 30, 2023, as compared to the periods ended December 31, 2022 and June 30, 2022. ​ The tables below present the balances of assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurements at June 30, 2023
​ | ​ | ​ | ​ | ​ | Quoted Prices in | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Assets/Liabilities | ​ | Active Markets | ​ | Significant Other | ​ | Significant
​ | ​ | Measured at Fair | ​ | for Identical | ​ | Observable | ​ | Unobservable
(In thousands) |  | Value |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3)
Measured on a recurring basis: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Debt securities available for sale: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Government sponsored entities | ​ | $ | 16,248 | ​ | $ | — | ​ | $ | 16,248 | ​ | $ | —
State and political subdivisions | ​ | ​ | 586 | ​ | ​ | — | ​ | ​ | 586 | ​ | ​ | —
Residential mortgage-backed securities | ​ |  | 14,676 | ​ |  | — | ​ |  | 14,676 | ​ |  | —
Corporate and other securities | ​ |  | 61,456 | ​ |  | — | ​ |  | 57,125 | ​ |  | 4,331
Total debt securities available for sale | ​ | $ | 92,966 | ​ | $ | — | ​ | $ | 88,635 | ​ | $ | 4,331
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Equity securities with readily determinable fair values | ​ |  | 8,205 | ​ |  | 8,205 | ​ |  | ​ | ​ |  | —
Total equity securities | ​ | $ | 8,205 | ​ | $ | 8,205 | ​ | $ | — | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swap agreements | ​ |  | 1,402 | ​ |  | — | ​ |  | 1,402 | ​ |  | —
Total swap agreements | ​ | $ | 1,402 | ​ | $ | — | ​ | $ | 1,402 | ​ | $ | —
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair value Measurements at December 31, 2022
​ | ​ | ​ | ​ | ​ | Quoted Prices in | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Assets/Liabilities | ​ | Active Markets | ​ | Significant Other | ​ | Significant
​ | ​ | Measured at Fair | ​ | for Identical | ​ | Observable | ​ | Unobservable
(In thousands) |  | Value |  | Assets (Level 1) |  | Inputs (Level 2) |  | Inputs (Level 3)
Measured on a recurring basis: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Debt securities available for sale: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
U.S. Government sponsored entities | ​ | $ | 16,305 | ​ | $ | — | ​ | $ | 16,305 | ​ | $ | —
State and political subdivisions | ​ |  | 613 | ​ | ​ | — | ​ | ​ | 613 | ​ | ​ | —
Residential mortgage-backed securities | ​ |  | 15,475 | ​ |  | — | ​ |  | 15,475 | ​ |  | —
Corporate and other securities | ​ |  | 63,000 | ​ |  | — | ​ |  | 58,325 | ​ |  | 4,675
Total debt securities available for sale | ​ | $ | 95,393 | ​ | $ | — | ​ | $ | 90,718 | ​ | $ | 4,675
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Equity securities with readily determinable fair values | ​ |  | 9,793 | ​ |  | — | ​ |  | 9,793 | ​ |  | —
Total equity securities | ​ | $ | 9,793 | ​ | $ | — | ​ | $ | 9,793 | ​ | $ | —
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest rate swap agreements | ​ |  | 1,537 | ​ |  | — | ​ |  | 1,537 | ​ |  | —
Total swap agreements | ​ | $ | 1,537 | ​ | $ | — | ​ | $ | 1,537 | ​ | $ | —
​ Fair Value on a Nonrecurring Basis The following tables present the assets and liabilities subject to fair value adjustments on a non-recurring basis carried on the balance sheet by caption and by level within the hierarchy (as described above): ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurements at June 30, 2023
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | Significant | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Other | ​ | Significant
​ | ​ | Assets/Liabilities | ​ | Markets for | ​ | Observable | ​ | Unobservable
​ | ​ | Measured at Fair | ​ | Identical Assets | ​ | Inputs | ​ | Inputs
(In thousands) |  | Value |  | (Level 1) |  | (Level 2) |  | (Level 3)
Measured on a non-recurring basis: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Financial assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
OREO | ​ | $ | 251 | ​ | ​ | ​ | ​ | ​ | ​ | ​ | $ | 251
Collateral-dependent loans | ​ | $ | 11,558 | ​ | $ | — | ​ | $ | — | ​ | $ | 11,558
​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Fair Value Measurements at December 31, 2022
​ | ​ | ​ | ​ | ​ | Quoted Prices | ​ | Significant | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | in Active | ​ | Other | ​ | Significant
​ | ​ | Assets/Liabilities | ​ | Markets for | ​ | Observable | ​ | Unobservable
​ | ​ | Measured at Fair | ​ | Identical Assets | ​ | Inputs | ​ | Inputs
(In thousands) |  | Value |  | (Level 1) |  | (Level 2) |  | (Level 3)
Measured on a non-recurring basis: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Financial assets: |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Collateral-dependent loans | ​ |  | 8,803 | ​ |  | — | ​ |  | — | ​ |  | 8,803
​ Certain assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). The following is a description of the valuation methodologies used for instruments measured at fair value on a nonrecurring basis: Collateral-Dependent Loans & OREO Fair value is determined based on the fair value of the collateral. Partially charged-off loans are measured for impairment based upon a third-party appraisal for collateral-dependent loans. When an updated appraisal is received for a nonperforming loan, the value on the appraisal may be discounted. If there is a deficiency in the value after the Company applies these discounts, management applies a specific reserve, and the loan remains in nonaccrual status. The receipt of an updated appraisal would not qualify as a reason to put a loan back into accruing status. The Company removes loans from nonaccrual status generally when the borrower makes six months of contractual payments and demonstrates the ability to service the debt going forward. Charge-offs are determined based upon the loss that management believes the Company will incur after evaluating collateral for impairment based upon the valuation methods described above and the ability of the borrower to pay any deficiency. The valuation allowance for individually evaluated loans is included in the allowance for credit losses in the consolidated balance sheets. At June 30, 2023, the valuation allowance for impaired loans was $1.0 million, compared to $1.8 million at December 31, 2022. Fair Value of Financial Instruments FASB ASC Topic 825, “Financial Instruments,” requires the disclosure of the estimated fair value of certain financial instruments, including those financial instruments for which the Company did not elect the fair value option. These estimated fair values as of June 30, 2023 and December 31, 2022 have been determined using available market information and appropriate valuation methodologies. Considerable judgment is required to interpret market data to develop estimates of fair value. The estimates presented are not necessarily indicative of amounts the Company could realize in a current market exchange. The use of alternative market assumptions and estimation methodologies could have had a material effect on these estimates of fair value. The methodology for estimating the fair value of financial assets and liabilities that are measured on a recurring or nonrecurring basis are discussed above. The following methods and assumptions were used to estimate the fair value of other financial instruments for which it is practicable to estimate that value: Cash and Cash Equivalents For these short-term instruments, the carrying value is a reasonable estimate of fair value. Securities The fair value of securities is based upon quoted market prices for similar or identical assets or other observable inputs (Level 2) or externally developed models that use unobservable inputs due to limited or no market activity of the instrument (Level 3). SBA Loans Held for Sale The fair value of SBA loans held for sale is estimated by using a market approach that includes significant other observable inputs. Loans The fair value of loans is estimated by discounting the future cash flows using current market rates that reflect the interest rate risk inherent in the loan, except for previously discussed impaired loans. Deposit Liabilities The fair value of demand deposits and savings accounts is the amount payable on demand at the reporting date (i.e. carrying value). The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using current market rates. Accrued Interest The carrying amounts of accrued interest approximate fair value. Borrowed Funds and Subordinated Debentures The fair value of borrowings is estimated by discounting the projected future cash flows using current market rates. Standby Letters of Credit As a part of standard credit arrangements, the bank offers standby letters of credits and other loan commitments. The fair value of these commitments is nominal. The table below presents the carrying amount and estimated fair values of the Company’s financial instruments presented as of June 30, 2023 and December 31, 2022: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | June 30, 2023 | ​ | December 31, 2022
​ | ​ | Fair value | ​ | Carrying | ​ | Estimated | ​ | Carrying | ​ | Estimated
(In thousands) |  | level |  | amount |  | fair value |  | amount |  | fair value
Financial assets: |  |  |  | ​ |  |  | ​ |  |  | ​ |  |  | ​ |
Securities (1) |  | Level 2 | ​ |  | 137,061 | ​ |  | 130,435 | ​ |  | 140,946 | ​ |  | 133,764
SBA loans held for sale |  | Level 2 | ​ |  | 20,074 | ​ |  | 25,031 | ​ |  | 27,928 | ​ |  | 30,141
Loans, net of allowance for credit losses (2) |  | Level 2 | ​ |  | 2,121,305 | ​ |  | 2,032,930 | ​ |  | 2,053,435 | ​ |  | 1,990,010
Financial liabilities: |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​ | ​ |  | ​
Deposits |  | Level 2 | ​ |  | 1,849,528 | ​ |  | 1,719,293 | ​ |  | 1,787,528 | ​ |  | 1,772,270
Borrowed funds and subordinated debentures |  | Level 2 | ​ |  | 433,310 | ​ |  | 431,459 | ​ |  | 393,310 | ​ |  | 391,312
​
(1) | Includes corporate securities that are considered Level 3 and reported separately in the table under the “Fair Value on a Recurring Basis” heading. These securities had book values of $5.3 million and market values of $4.3 million. Additionally, includes equity securities with readily determinable fair values of $8.2 million.
(2) | Includes collateral-dependent loans that are considered Level 3 and reported separately in the tables under the “Fair Value on a Nonrecurring Basis” heading. Collateral-dependent loans, net of specific reserves totaled $11.8 million and $8.8 million at June 30, 2023 and December 31, 2022, respectively.
Limitations Fair value estimates are made at a point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. Fair value estimates are based on existing on- and off-statement of condition financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. In addition, the tax ramifications related to the effect of fair value estimates have not been considered in the above estimates.

X
- References No definition available. + Details
Name: | us-gaap_FairValueDisclosuresAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration